How to set an effective vacation policy

Setting a clear, effective vacation policy is an important part of your people and culture strategy and should be at the top of any employer’s mind.

Ensuring that team member vacations are well taken care of can help prevent team member burnout and boost retention. And don’t forget about the benefits to your people and culture professionals; a well-thought-out policy for managing vacation time and pay will save them plenty of headaches.

Legislation and requirements in Rwanda

Employment/Labour standards legislation for Rwanda require that all team members, part-time and full-time, receive a minimum amount of vacation time and pay. There is also an act that sets out minimum vacation requirements for companies and organizations.

Vacation time and pay are addressed separately. Vacation time is earned after every 12 months of consecutive employment (i.e., team members are not entitled to vacation during their first year of work) and must be taken within four to twelve months of when it’s earned.

Rwanda’s Law requires a mandatory two week minimum for vacation time. That minimum can increase with a team member’s length of service.

There are mandatory statutory holidays to consider as well. Full-time team members are eligible for paid statutory holidays, and part-time team members may be eligible as well depending on your contract with them.

Many employers allow team members to choose their own vacation time, within reason, but it’s actually up to an employer to make sure team members take their time off. Some companies, don’t allow team members to waive vacation time, recognizing the need for their team to get much-needed breaks.

Vacation pay is usually paid out when a team member goes on vacation. It can also be paid differently, for example, as a lump sum each year or on each paycheque.

These are just the legislated minimums. If a collective agreement or employment contract provides a greater right or benefit (i.e., more vacation time or pay), that trumps legislation and payroll and HR professionals must adhere to those rules instead.

Lastly, you need to have a clear form and process for vacation requests and keep track of how much vacation time and pay has been taken. Some jurisdictions require it, and since it’s up to employers to prove they’ve given vacation time, they could end up paying team members twice (e.g., upon termination) if there’s no record that they’ve already been paid.

What works and what doesn’t?

Now that we know how to set a vacation policy that meets the minimum legislative requirements, let’s get creative. Going beyond the minimum requirements and offering a great vacation package goes a long way towards fostering team member satisfaction and retention.

One strategy that’s garnering a lot of attention lately is the practice of offering “unlimited vacation time.” Unlimited vacation policies have been implemented by the likes of Virgin, Foursquare, BuildDirect, and Tumblr, with proponents such as Richard Branson believing that unlimited vacation time will boost “morale, creativity, and productivity.”

The idea, of course, is that team members will feel free to take whatever time off they need without worrying about using up their precious few vacation days. This idea, however, isn’t without its potential drawbacks. Some team members abusing the policy as well as others feeling pressured not to take any time off are both concerns.

One company, Unbounce, has a unique approach to vacation time that seems to be working for them. They’ve implemented policies that actively encourage their team members to take a vacation, ensuring that everyone on their team gets recharged. Unbounce offers a generous four weeks of vacation to everyone on their team, as well as a $1,000 bonus for those who take it. The company says it hopes that the cash “helps [team members] explore new avenues and experiences.”

Sometimes a team member doesn’t need a vacation, they simply need a day off to recharge. Offering paid birthdays off, personal days or a generous number of sick days helps team members get the time they need when they need it. Not only does that increase productivity, it also helps to prevent presenteeism.

Once you’ve decided how much vacation time and pay your team gets, you’ll need to consider things like how team members will receive vacation pay (on each paycheque or when they go on vacation?), whether they’ll be able to carry over any unused vacation to the next year, and how vacations will be requested and scheduled. Whatever you choose, ensure that the rules are clearly stated and communicated to your team so that everyone is on the same page.

The importance of a good vacation policy

Coming up with an effective vacation policy really just requires more than simply knowing how to stay compliant. It’s about understanding how important it is to recharge, and ensuring a smooth process so that team members can do so will make everyone’s life easier.

In addition to having well-written and effective rules regarding vacation pay and time off, it’s important to make sure that the policy is being implemented correctly and consistently. It would not look good if one team member was allowed to carry over unused vacation time while another was not, for example.

It’s also a good idea to encourage open communication within your organization so your team feels comfortable speaking up if the current vacation structure isn’t working. This is especially true when making any major changes to your policy.

Beyond that, it’s best to double check that your policy meets all requirements for Rwanda.

Vacation is an important consideration in any working environment and taking the time to come up with a solid policy will ensure team members are well-rested and refreshed while limiting stress for payroll and HR professionals. So get creative and draw up a vacation policy your entire organization will love. We know you can!